AfDB approves US$ 121 million for electricity expansion to rural households in Uganda

The African Development Bank (AfDB) Group Board approved on 16 September 2015 a US$ 121 million loan and grant to help Uganda’s government improve access to electricity for rural households, businesses and public institutions to ultimately improve the livelihoods, economic opportunities and access to social services in rural communities. The Bank Group allocated a US$ 100-million loan and an additional €10.205 million grant mobilized by the AfDB from the Sustainable Energy for All (SE4All) window of the EU-Africa Infrastructure Trust Fund (EU-AITF).

Only 14 percent of Ugandans nationwide and seven percent in rural areas have access to a reliable energy source. The limited access to electricity and high energy costs are hampering economic development, entrenching inequality and impeding the improvement of livelihoods and further contributes to the high cost of doing business in the country. To address this situation, the government is implementing various measures, such as its Vision 2040 to achieve an 80 percent electrification rate by 2040, the five-year National Development Plan targeting 30% overall access by 2019/20 and the 10-year Rural Electrification Strategy and Plan (RESP-2) targeting to increase the current electricity access in rural areas to 26% by 2022.

The AfDB financed Uganda Rural Electricity Access Project will build about 1,147 km of medium voltage and 808 km of low voltage distribution networks and provide last-mile connections to the grid for over 58,206 rural households, 5,320 rural business centers and 1,474 rural public institutions (schools, health centers and administration offices). In addition, it will support the scaling-up of “inclusive and green” connections by supplying and installing ready-boards for those who cannot afford household wiring and allowing households to pay connection charges in installments to intensify connections for more than 99,000 new customers near the existing grid in electrified rural and urban areas.

The project financing plan also includes a component to support key sector institutions namely, the Rural Electrification Agency, in its ability to execute and monitor viable feasibility studies and social and environmental assessments, as well as that of the Electricity Regulatory Authority to conduct studies to determine appropriate tariff levels.

Speaking after the approval, Alex Rugamba, AfDB Director of Energy, Environment and Climate Change Department said, “The development of sustainable energy infrastructure to address key constraints hindering economic transformation is central to AfDB’s work in the region. This project financed in partnership with the EU will advance implementation of the government-led, sector-wide approach and ongoing harmonization process in Uganda’s energy sector to drive economic development and improve livelihoods of rural Ugandans.”

The Uganda Rural Electricity Access Project is one of several projects designed by Government of Uganda to meet 26% access target in rural areas by 2022 under RESP-2.